Interview with ISSY BACHER - Tuesday, 15 June 1999
moneyweb.co.za
AH: Let's get a little bit more to every man's story and the gold story is something that has been fascinating us - certainly on this programme - for some while. You've been accurate, Issy. Just a couple of week ago I called you and said, "is it time to buy gold shares now after we saw that crack down to the $268 level?" You said, "no, stay away, stay away". We are now down to below $260 an ounce - are the gold shares starting to offer value now?
ISSY BACHER: Alec, what I've got to say is based on cycles … It's truly technical. I've examined the Toronto Gold Index, I've examined shares like Homestake, I've looked at our own Anglogold, I've looked at marginals like Durban Deep and, wherever I look, I see that we're at what we call a low-risk buying level, and my advice to people is now: if it falls, buy.
AH: Now explain that, what is a low-risk buying level? What are the chances, or what is the percentage likelihood of that level being
reached?
ISSY BACHER: Well, the cycles are really right at the bottom, so 5% down from these levels is a possibility. If you're a trader, I'd put it to 10% stop-losses. Historically, these cycles have been very, very accurate, and I would be looking to buy South African gold shares
without a doubt. As a matter of fact, it's quite interesting. My son Michael just phoned me. He was on the Internet and Smith Barney put
out a buy signal on Newmont Mining. They had a hold on it before - so that's coincidence, and that's quite encouraging, sort of reinforcing
what I've got to say.
AH: When last were gold shares at such a positive buying area as they are today?
ISSY BACHER: Well, you know, the whole of last year actually, there were five cycles. You could have bought five times and made
quite a lot of money last year. Now this year has been largely flat. Nick Goodwin has been pretty right in saying he's in the buying area, but his timing hasn't.
AH: Hasn't called the absolute bottom yet?
ISSY BACHER: No, he hasn't. But he's definitely right in saying that there is value in these gold shares - there's no question about it at all. And the more negativity that you get, the more positive I get, actually.
AH: Well Nick often says, "when the last gold bull leaves town, that's the time to really climb into gold shares". Do you think the last gold bull has left town yet?
ISSY BACHER: No, I don't think so. No. I think there is an underlying feeling that something is going to happen and, of course, I'm not really a gold bull. I play up and down. When gold goes, it's very, very volatile, and you can make quite a lot of money.
AH: Issy, from your analysis, which are the gold shares that you should be piling into right now, if it is in such a good, strong buying area?
ISSY BACHER: Well, we don't have much of a choice nowadays. You've got to look at JCI Gold, its underlying value - it's a discount
to Westonarias, or the holding company, CAM- - it's got other interests besides gold. Harmony looks very interesting, with the tie-up between Harmony in KalGold now. I looked at my cycles on Durban Deep and they look exceptional. It's a very marginal mine. Anglogold of course - the fundamentals say it's a bit rich at this price. It's discounting a much higher gold price, so you don't have much choice, actually.
AH: So, from what I hear, Durban Deep sounds like a really good one to you, and Harmony?
ISSY BACHER: Harmony and JCI Gold. I think JCI Gold is quite strong today, R4,90. I think they had a previous R3,60, at a much
higher gold price. Now it's at R4,90. There you are.
AH: Why is it that gold shares have actually held up so well, in spite of the fact that the bullion, the international gold price in dollars, has been falling?
ISSY BACHER: Well, there is a perception that they are going to move up. You know what's also very interesting is that I did a relative study between De Beers and gold shares, and platinums and gold shares and, of course, gold shares have underperformed the other
precious metals remarkably. To me it's just logical that the upside for De Beers and Implats now is sort of limited and they go up, but it's had it's enormous rise already, and the play is going to focus on the lower end of the spectrum, which is gold.
AH: Issy, how much of a rise might we see?
ISSY BACHER: I don't really forecast. We work on time. Our cycles work on time, really, when it gets to the top of the cycle. But it
sounds logical to me, looking at it now. I think the last top of the gold index - unfortunately the JSE golds don't give us the history now - but I think it got to 1 600 last.
AH: It's at 840at the moment..
ISSY BACHER: I would say it's going to top 1 000. But, as I say, if you forecast, you usually make a fool of yourself.
AH: So it's conceivable that the index which is at the moment in the 840s - and in fact I'll give you an exact index here - 837, could go beyond? If it's going to go beyond its previous top of 1 600, that's more than 100%?
ISSY BACHER: It could happen.
AH: And your cycles, how long would it take to top?
ISSY BACHER: They're very dynamic. You know, they change, but I would say there is a rise for about one and a half months - when
the bottom starts moving up.
AH: Within one and a half months?
ISSY BACHER: No, from here to the peak. I'm talking short term now. Our long-term cycles are quite interesting. They're not as reliable as our short term, but our long term says that the big low is about August - the big low. Now, if you remember 1982, the gold
price bottomed, I think a bit higher, in June, at 267. I don't think it's going to happen again, but it was 500 by December.
AH: Issy Bacher giving our gold bulls - and there are plenty of them in South Africa still - a little more hope for the future.
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